The restoration of Welsh Highland Railway has a colourful and complex history. This article provides the modern history:
The winding up of the original Welsh Highland Railway (WHR)
The 1922 WHR company was wound up in 1944, after the Ffestiniog Railway (FR) had been released from a disastrous lease taken out on the WHR in the 1930s which was an ill-fated attempt to operate and promote the two railways (FR and WHR) as one entity that was to fail. The failure of this lease was one reason for the eventual closure of the Ffestiniog, although it is clear that even on its own the FR would have struggled to survive.
On winding up, the rolling stock and track had been sold and all that remained of the assets were the empty trackbed and related buildings and land. The trackbed itself could not be sold off in the same way that had the other assets as it was 'protected' by an Act of Parliament and the operating company was a statutory company, requiring a new act of parliament to dissolve it. This same legal standing was to save the Ffestiniog Railway both from ruin as it lay empty prior to the arrival of preservationists and also later in a key court case related to the use of FR's trackbed for a hydro-electricity scheme (but that's another story).
Soon after the WHR's winding up, articles appeared in the railway enthusiast press suggesting the WHR's rescue. However plans were also put forward for the use of the trackbed for a long distance footpath.